The criteria Hargreaves Lansdown uses to assess whether funds align with its definition of ESG have become more stringent, with the wealth manager setting up a dedicated team of analysts tasked with managing environmental, social and governance risks for its platform, workplace and advice clients.
The team will be run by lead analyst Dominic Rowles, who was previously a responsible investing sector specialist within Hargreaves’ fund research team. He is joined by graduate trainee Tara Clee, who specialises in policy and horizon scanning, and Laura Hoy, who was previously a part of the firm’s equity research team.
The team will determine if third-party fund managers are aware of the risks posed by ESG issues, and are managing these risks effectively. They will also provide insight into how fund managers integrate ESG, which will be factored into decision-making for fund selection.
Exclusion to funds
The wealth manager will exclude “persistent violators” of the 10 UN global compact principles from its funds, as well as companies that generate over 20% of revenue from thermal coal power and oil sands extraction.
Companies that generate revenue from the production, maintenance, sale, or research and development of controversial weapons, or services that are considered essential for the lethal use of the weapon, will also be barred from Hargreaves’ investment solutions.
The firm has also imposed ESG requirements for all fund groups, including its wealth shortlist, mandating that all fund groups must be signed up to the United Nations Principles for Responsible Investment, and have pledged to hit net zero by 2050.
Rowles said: “We can now commit to avoiding controversial weapons, persistent UN Global Compact violators and companies that generate significant revenues from thermal coal or oil sands, in any portfolios where we have direct control over the investments.
“We’ve also beefed up our requirements of the fund houses we invest with to ensure they’re doing all they can to adapt to and mitigate the climate threat we’re facing. In addition, we’ve doubled down on our commitment to responsible investment with a significant investment in ESG data, which in time will allow us to offer unrivalled investment insights to our clients.”
Emma Wall, head of investment analysis and research, said: “Our vision for ESG at Hargreaves Lansdown is to inspire confidence for a sustainable, resilient, and successful financial future. For us, investing with ESG criteria in mind is simply good risk management. We want to help our clients invest in sustainable businesses – businesses that aren’t going to fall foul of regulation, government policy or dwindling consumer demand because of the way they operate.
“Sustainable businesses are more likely to have sustainable revenues, profits and dividends. We are committed to delivering great outcomes for our clients, and believe our new ESG investment policy, and stewardship and engagement policy, coupled with a talented and passionate team, will help us deliver this goal.”
